you see a tree? a treatment for cancer? alternative fuel for our cars? do you think of hope for the environment or food or clothing, shelter? we do. weyerhauser, growing ideas. ♪ >> there is another woman i have to thank. thank you governor palin for your endorsement. >> 80 -- 8 tea party favre upsets a heavily favored republican with a gop backlash. >> how come it's occurred nearly two decades to pay her college bill to get a college degree. policy makers a living? >> they want to hold these middle-class tax cuts hostage until they get an additional tax

cut for the wealthiest 2% of americans. >> taxing the wealthy, the president meant controversial consumer advocate elizabeth warren to add up the new consumer financial protection bureau. ♪ >> back to joining us, i am markscherer in for gordon peterson. christine o'donnell had a victory over mike castle in the united states senate domination in delaware. she won with the backing of sarah palin and south carolina senator and rush limbaugh and sean hannity. how do you feel three days later? >> bill buckley had a roll, always support the most right-

wing candidate who was elected i think the republicans broke that rule. it could cost republicans control of the senate. >> it looks like we have this anger we have been talking about. this looks like a temper tantrum that ran amok. there has been some tea party candidates who have been nominated and sent a message, made a statement, and can win and compete in the fall. in this case, she was going to have to run against the democratic party in delaware but much of the republican party as well. >> in addition to the book will, there was the ronald reagan 11th commandment, about shalt not speak ill of another republican in public. this was not only colored by what karl rove said had to say about this but what jim demint.

said. he said he has been in the majority with the republicans to do not have principles. what bigger shock can you take a? >> ronald reagan had an 80% rule. somebody is what is 80% of the time then he is our friend and ally, he is not a 20% foe.. that seemed to be the prevailing attitude any way. >> could buy bipartisanship. any chance -- the death of the modern republican is a very sad thing because it kisses goodbye a chance to make meaningful compromise in congress. without that, nothing will happen. >> what is fascinating to watch is on tuesday night, most people agreed that this is somebody who won and does not have a chance and they are not going to spend a lot of money. as the week went on, all the

sudden the republican establishment discovered virtues in cristina o'donnell. they want to notify her mother. >> that is not unusual. you have a party and you get a candidate who wins the nomination who is not your favorite and what is at stake is the scroll of the senate and house and you discover her virtues quickly. what is important here is you have mark rubio in florida, joe miller and alaska, with christine o'donnell, she has a long shot but that is all you've got. you need an inside straight if you are a republican and you want to control the senate. you want to go for the seats you can possibly get. >> in addition to them recognizing that they need to make a majority, i think there is a factor. they reacted initially with

their own instincts and then they got pushed back. they cannot anchor the tea party base unless they become in jeopardy. on election night, the talk was that they are not going to spend a dime on her and there will be no money out of washington and within 48 hours, john cornyn the republican senator in charge of the reelection campaign backed off and said she would get the lot and everyone else was. they have to be careful about how they react and interact with the tea party base. they have demonstrated that they have the upper hand right now, not washington. >> in addition to the tea party, on election day, i was an elegant -- delaware covering the race and the rush limbaugh radio show slammed mike castle by suggesting that he had voted to impeach george bush voting to send the impeachment resolution

to the house judiciary committee where it was intended to die. rush limbaugh and the tea party are pretty dangerous. >> he also took a shot at the buckley rule. he said there is no more buckley wrote. he said a vote for the most conservative person and the race. -- in the race. he said not to qualify it. you have a rush limbaughs and the sarah palins and the show on hannitys and on the other side was the mets' mcconnells. >> when i agree with my liberal colleagues, i have to recalibrate. the republicans wound up in the majority or the minority, it would be an important race. what is at issue is who will be

in charge of the senate judiciary committee. if you have a nomination for the supreme court, that is what is at stake. that is why there was such anxiety this is another chance to stop the obama revolution. and jeopardize a because one candidate is not as conservative as another is simply a tactical mistake them up i do not want to get in the middle of the republican debate >> there is an ideological purity that the tea party brings to the debate. they will not tolerate anyone who was not one after% down the line with bam bam who wins the election? >> i don't know but there is a possible tidal wave election. despite the laughable problems, she is kind of perky and cute

and people like that. she has that sarah palin thing going for are. i don't think it is impossible for her to win. >> some critics say the tea party decides to qualifies as a real republican. >> the tea party is the republican party now. this is not a fringe element. >> there is no room and all for that kind of moderation in the republican party. >> that is maryland democratic congressman chris van holland and james carville on the influence of the tea party on the gop. the democrats -- the republicans were too willing to compromise with the democrats. >> congress cannot just do nothing. we have big problems coming down

the pike. some are getting ready to run in 2012 and the republicans are terrified about the tea party but for them to do nothing is not an option. there is an opportunity here in all this to get something constructive done. tax reform is one thing, instead of attacking the government, let's fix it and go back to 1986 where if you get away all the stupid deductions over the years, you can't cut tax rates by a considerable amount. you can't get rid of a filing to the irs if you do it correctly. there could be out of all of this, a positive move toward a tax simplification and tax reform. >> that is an interesting idea but the litmus test for the tea party is tax increases. the elimination of a reduction or any sort, and makes them fearful that the rates go lower

it will be seen as a tax increase. >> meritorious yes, but out of the question politically. they have a litmus test that goes to the right of life, social conservative issues. they could get rid of the irs if they could. there is no room for compromise. compromise is a bad word. >> completely wrong. the tea party has distinguished itself in being almost exclusively about governance, regional government, taxation, economic issues. it is not the social conservatives. that is what distinguishes it. the other element that is being missed here is that rose spontaneously in reaction to an extremely aggressive and extremely ambitious left liberal administration. instead of attacking tax reform

which the administration could have done at the beginning of its administration and they would have had bipartisan agreement and great success, they decided they wanted to reform health care which nobody at the time thought was a major issue in a time of economic recession. >> you cannot rewrite the rules. sarah palin did not come to the state of maryland to endorse the republican opponent of bob ehrlich. >> she is not tea party. she is not the titular head of the tea party. the movement is economic. >> the tea party of florida, the tea party spokesman, they work as a unit. >> there is an opportunity here for something that is a little counterintuitive. if we go back to what history

shows in 1994, we will have a more conservative congress anyway. we don't know if the republicans will run it. it will be a more conservative congress. taxes will be part of the coming debate. you look at president obama and what he wants on his resume for 2012, i think this white house does want spending cuts and deficit reduction on their resume when they run for reelection. in a way, the president might be able to -- the two sides might be able to find common ground that could benefit both. the congress that comes in could still demonstrate that they can get things done and they are not a bunch of crazies that don't know how to work in washington and can accomplish some of their goals and reward their constituents and the president could get something on his

resume, some conservative credentials which i think he does want. he talks a lot about deficit reform and spending. >> that is too realistic. there is a negative energy. it is totally true. so far, the energy has been in other directions. people cannot just tear things down. they have to do stuff. >> if a few tea party candidates win, that does not mean they dominate the republican caucus. it would be conservative but it will not be run by the tea party. >> another election was in the district of columbia where the former mayor adrian fenty was controversial but it was a highly publicized battle that involved schools chancellor michelle rhee. >> the winner of the democratic primary, vincent gray sat on the

city council and supported education reform. michelle rhee is the national face of educational reform. she did something unforgivable. she jumped into a political partisan race. she worked for the defeat of the person who will be the mayor of the district of columbia separate her from educational reform and she was an affected person. i like a lot of things about her, but educational reform in the district of columbia does not and if he elects to leave. >> educational reform would not have happened without michelle rhee. she is an historic figure. it is almost impossible to define the union getting rid of bad teachers and raising pay for

good teachers. she is a true hero of the movement. >> the fact that she will go -- we will see. in a couple of years, my guess is that they will not be able to get rid of the teachers' union. they will not be allowed to get rid of the bad teachers and we will go back to the status quo. >> people need to understand that the most important thing with educational reform, we took the elected school boards that has been the problem in the district of columbia -- columbia and put it under the matter. the person that puts that is the one that will run the district of columbia. >> the timing of that maryland that it is important on a national scale. those are the things of education reform. it was led by the corporate community. it is on the verge of releasing

a new movie which is called " waiting for superman." it was created and written by the same director who made "an inconvenient to appear cup they are supporters of reform by the business roundtable here in town. this will have the same kind of impact of that "an inconvenient truth" had on environmental issues. that is making some select city produce. we had one in d.c. this week and it will go national. one of the leading voices in this is michelle rhee, a reformer who is about to get run out of town because of the very reforms that are being advocated. >> this is normally a local issue and it made this a national issue. the district of columbia is not a state so you're not looking at potential senators for presidential candidates.

michelle rey is a lightning rod. she is the symbol of this reform. she was quite ruthless, i think, perhaps in politics, but effective in reform. i think this is huge. the unions tried to get adrian fenty taken down and they succeeded and that is a message. >> the people had to live with him for three years took him down. it was not because of education reform but the way he governed. he did not listen to people. he paid for it. >> politics is a matter of addition not subtraction. so ominous deserves tax cuts, next. >> we call for bipartisan action to cut spending and stop all the tax hikes that are coming. >> because wages and income had flat line for a middle-class families, they should definitely get an extension of the tax cuts

in 2001-2003. >> the president and minority leader john behner debating what to do about the bush tax cuts set to expire at the end of this year. john behner made an appearance on television and made a conciliatory, but it did not last long. >> it might have been an opportunity for the white house or democrats to start a dialogue with the other side. instead, the democrats reacted in a knee-jerk way and attacked. they met -- john behner may have misspoke but they could have wrapped their arms around him. they could have accepted what he said with statesmanlike comments. it could have been the start of a negotiation which would have made john behner's life much more uncomfortable.

the other republicans were not happy with what he said in agreeing to accept the middle- class tax cuts and opening the door for the fight. >> it was fascinating. it gave the white house and opening. it was an automatic reaction to attack him again. >> he was running away from himself so fast. he caved in. well, metal is there in the minority leader's backbone? >> a couple of weeks ago, there was a column that said congress should do what it does best, nothing. if congress does not think those tax cuts go away and we need the

revenue. i know that is not great for the economy right now. if they went back to where they were in the 1990's, the economy was doing well, god knows that the government desperately needs the money. i think gridlock is a good thing that i do you think that will happen? politically you can argue about the $250,000 and above and a space to get their continued task of but this seems to be an overwhelming consensus of people under that to retain their bush tax cuts. >> i think there'll be no action until after the election in a lame duck session. i think you'll probably have an extension of all the cuts. peter orszag was obama's own budget director. he wrote a piece in which he argued that to either keep them all or let them all go. he wants them all abolished in

two years. speaking as an economist, what will help our economy the most? the tax cuts that affect the rich, so-called, a fact half of the small business in, in the united states. do you really want to make a hike on those taxes on the biggest engine of hiring in the country at a time of 10% unemployment? peter orszag says keep the now and abolish them in two years and he is right. >> in two years, they could be repealed. >> that is the hope. is that the economy will recover and more money will start coming in to the federal government in other ways and this issue will go away and the tax cuts [inaudible]

>> in the year of the president's election -- [inaudible] >> two years this time, two years the next time. >> the republican majority, the article says that the republican majority is against tax cuts than i do you think that peter orszag is a republican operative? >> i think he said what he wanted to say. >> on the eve of a presidential election, the republicans are going to raise taxes? not a chance. >> he was writing a debut column in the new york times" and he got a big bang for his box and got publicity and attention and that helped him. >> that does not affect whether it is a good or bad idea. >> what will happen if we don't

extend the tax cuts for the people with $250,000 or more, they sparked the economy, doubt that very little the jobs they created the last few years. they have done a great job for us thank you very much. >> president obama finds a way to hire a can -- a controversial consumer advocate. his name elizabeth warren to set up the consumer financial protection bureau. he is making her a presidential assistant who reports to secretary of the treasury tim geithner. why not just name her to head the bureau in the traditional way? >> because he cannot get her confirmed. the votes are not there for her apparently. i am with senator dodd on this. they need to have somebody who is confirmed by the senate. if she is in and buys her a role, she will set up the

program. this is just wrong. she cannot do this as an advisor. you need the authority that comes with the job and that comes with getting confirmed by the senate that it undermines the relationship of our branches of government. >> the president can pick anybody he wants but then the senate has a say. we have seen appointments and that sort of thing and presence end run but this is a whole new animal that creates an illegitimate department. if they put a puppet in there, everybody will know it and the senate would not confirm the puppet. the agency that was supposed to be the stalwart for consumers is undermined instantly. the democrats are so concerned about turnout among their base, why not nominate her and put this in the reelection. they need to tell the

progressives to get up off their couch. >> presidents like to go against the incumbent presidents, the imperial presidency. they cannot deal with congress anymore. our system is so broken. >> elizabeth warren is great and yet they cannot confirm her. something is wrong here. >> why not make it an issue? wall street despises harder it she has taken them on. >> i would assume it's cowardice. they assume it is a fight they will lose in the senate. and politically this is just not right for it we have a constitution and we have a separation of powers. this is extra-legal and if you want to appoint somebody to a position that requires liberal

senate, get the approval of the senate. >> that is it for this week. two men again next time to "inside washington." ♪ >> for a transcript of this broadcast, log onto insidewashington.tv

♪ gwen: reaping the whirlwind. what this week's election results mean for washington and the rest of the country. tonight on "washington week." >> ladies and gentlemen, the people of delaware have spoken. [cheers and applause] gwen: start your political engines as a newcomer shakes up the republican party. >> just a lot of nutty things she's been saying. gwen: and democrats try to make the most of it. >> it's real tough for the republican party, really it's kind of hung on a shingle, you know. no moderates need apply. gwen: but if this is a fundamental shift, who benefits? and how will that play out in an economically unstable time? >> their platform apparently is